January 31, 2019 – The Court hearing the Checkout Holding case approved the adequacy of the Debtors’ Disclosure Statement and confirmed the Joint Prepackaged Chapter 11 Plan of Checkout Holding Corp. and its Affiliated Debtors [Docket No. 266]. In a press release issued on January 31 following confirmation of the Plan, Catalina, a unit of Checkout Holding historically known for doling out cash-register coupons, announced that it expects to complete its restructuring and successfully emerge from Chapter 11 in the coming weeks.

“The Court’s approval of our Plan will enable Catalina to move forward as a stronger company that is well positioned to succeed in a competitive marketplace,” said Catalina CEO Jerry Sokol. “Through this process, which took less than 60 days, we have significantly reduced the debt on our balance sheet. With this solid financial foundation in place, we are accelerating critical investments in technology, advanced analytics and data science to transform the in-store experience for buyers and deliver innovative new solutions to solve our customers’ challenges.”

As previously reported in the Disclosure Statement [Docket No. 12], the pre-packaged plan of reorganization stated, “the restructuring will leave the Catalina debtors’ businesses intact and will substantially deleverage their capital structure.” Specifically, balance sheet liabilities will be cut to $281 million in secured debt from $1.9 billion in secured and unsecured debt, representing an 85% debt reduction, facilitating what the company says in the press release is “continued investment to enhance the company’s capabilities for the benefit of its customers.”

“This deleveraging will enhance the Debtors’ long-term growth prospects and competitive position and allow the Debtors to emerge from the Chapter 11 Cases as a stronger company, better positioned to deliver value to its customers,” the Disclosure Statement said.

The Plan contemplates the distribution of New Common Stock to the Debtors’ prepetition secured lenders (90% on account of Allowed First Lien Debt Claims and 10% on account of Allowed Second Lien Debt Claims, each subject to dilution by the Management Incentive Plan) and no impairment to the Debtors’ other creditors, except the NCS Rejection Claims and the General Unsecured PDM Claims. Creditors in both of those classes will receive no distribution. Other general unsecured claims will continue to be paid or disputed as if the Chapter 11 filing never occurred.

The following is the Summary of classes, claims, voting rights and expected recoveries:

Class 1 (“Priority Non-Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Estimated recovery is 100%.

Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Estimated recovery is 100%.

Class 3 (“First Lien Debt Claims”) is impaired and entitled to vote on the Plan. The total of claims in this class is $1,075,545,556.48 (minus the aggregate amount of the DIP Facility Roll-Up Loans) and each holder shall be entitled to receive its pro rata share of 90% of the New Common Stock issued on the effective date (subject to dilution by the Management Incentive Plan). Estimated recovery is 17.4%-43.6%.

Class 4 (“Second Lien Debt Claims”) is impaired and entitled to vote on the Plan. Each holder shall be entitled to receive its pro rata share of 10% of the New Common Stock issued on the Effective Date (subject to dilution by the Management Incentive Plan). The total of claims in this class is $471,987,841.37 and estimated recovery is 3.8%-9.5%.

Class 5 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Each holder of a General Unsecured Claim shall be paid by the Debtors in the ordinary course of business as if the Chapter 11 Cases had never been commenced. Estimated recovery is 100%.

Class 6 (“NCS Rejection Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The holders shall not receive or retain any property under the Plan. Estimated recovery is 0%.

Class 7 (“General Unsecured PDM Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The holders shall not receive or retain any property under the Plan. Estimated recovery is 0%.

Class 8 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Estimated recovery is 100%.

Class 9 (“Subordinated Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The holders shall not receive or retain any property under the Plan. Estimated recovery is 0%.

Class 10 (“(Existing Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The Existing Equity Interests shall be cancelled. Estimated recovery is 0%.

Class 11 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Estimated recovery is 100%.

Looking further ahead, the company said its successful financial restructuring is another step forward in what it calls its “omni transformation”, led by an experienced team of thought leaders and innovators, including Chief Data and Analytics Officer Dr. Wes Chaar. Dr. Chaar and his team will be focused on fortifying Catalina’s buyer intelligence data in a variety of ways to provide an increasingly dimensionalized view of buyers.

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